For the anti-defined benefit people...

[pb4uski]

Yes, and BIL's bro is a retired Detroit detective..... I don't think his DB has made him free of anxiety.

 

[Chuckanut]

Detroit workers were also not part of SS, IIRC. So they are even more dependent on their pension than many others.

 

[34rlsa]

How does the risk of a government or mega corp DB plan failing compare to the risk of a portfolio failing in major market crash? Either scenario is possible... if you're a worrier does it really make much difference which way your ER plan is structured.

There is always risk. The zombies won't care how your ER is funded.

 

[scrabbler1]

We have a monthly "paycheck" simply by depositing the annual portfolio withdrawal in a high yield savings account, and then having $X amount, enough to cover general expenses, deposited to our bank checking account each month.

My ER plan included as a monthly income stream the monthly dividend paid out by the big bond fund I have nearly half a million dollars in. The bond fund includes bonds at the low end of investment grade and the high end of just under investment grade. The monthly dividend has dropped a bit in the last 6 years but I have greatly increased the number of shares in the fund to offset the decline in DPS. The annualized dividend yield is about 4.5%.

Last year, as a supplement to the monthly cash dividend, I began taking the quarterly stock fund dividend in cash instead of reinvesting it. The quarterly dividends pretty much coincide with the quarterly spikes in my expenses but I still have cash left over which I reinvest elsewhere. This was always anticipated as a possible change to my ER plan.

 

[scrabbler1]

Which is part of the point that many of us are making, that we are comfortable with risk so are not at all anxious about retiring without a defined benefit pension. A bird in the hand...(lump sum) is worth two in the bush (DB pension benefits).

That's just the reality of today. And even define benefit pensions are not all rock-solid because of overpromising and underfunding.

As I have mentioned I other threads over the years, I have both DB and DC sources in portfolio. I often referred to them as my "reinforcements" which await my unfettered access to them when I turn ~60. For example, besides SS I have a frozen company pension, a pension I hope is now on more stable grounds (not that I thought it was in any real danger) after it became frozen in 2001 when I was still working for MegaCorp. In its place is a Cash Balance plan which is a hybrid of DB and DC plans. It isn't worth anywhere near as much as the frozen pension but I can take it as a lump sum or as an annuity. Just a few days ago I asked reps from the plan administrator to find out what kind of payout options including early ones (i.e. before I turn 59.5) are available in case I need some extra money before I turn 60. Those options are okay but not great, a Plan B or Plan C, perhaps.

 

[ERD50]

How does the risk of a government or mega corp DB plan failing compare to the risk of a portfolio failing in major market crash? Either scenario is possible... if you're a worrier does it really make much difference which way your ER plan is structured.

There is always risk. The zombies won't care how your ER is funded.

Well, a ~ 3% inflation adjusted WR has survived every market crash of the past, including the Great Depression, and the inflationary 80's. And that is without even making any downward adjustments.

Yes, there is risk in everything, including DB pensions (though currently covered by PBGC up to the cap).

-ERD50

 

[Helen]

Thanks for posting the link to this article, OP. I sent the link to someone who is in the beginning stages of deciding whether to cash in his pension or not.

 

[Hermit]

Money mag had this article or a very similar one this month. Couple of survey points I thought were humorous. 1) People who had travel or golf as one of their hobbies were happier than ones whose main hobbies were reading, hunting, or fishing. They implied they were isolating hobbies and not as inclined to leading a happy life. 2) Having or not having children had no impact on happiness, but having children living within 10 miles of personal residence did lead to an unhappier one. They speculated forced babysitting.
Pretty funny stuff... So don't live near kids and if you continue to hunt or fish be prepared to take Zoloft!


Sent from my iPad using Tapatalk

Wow. I didn't know... I must be very sad!

 

[haha]

in hindsight I guess I should have said "it's very difficult to retire anxiety-free without one"

What is very difficult for me is to guess what personal need you are trying to stroke with this post that seems so silly to so many of us, sitting here retired for years, who did not have a defined benefit pension. How do you think small business owners retired and continue to retire? Who gives them their defined benefit plan?

Ha

 

[daylatedollarshort]

Here is a link from Vanguard on the sources of retirement income for wealthier retirees. Pension income only accounts for 20% on average:

https://institutional.vanguard.com/iam/pdf/CRRRIP.pdf?cbdForceDomain=false

 

[Big_Hitter]

^ no surprise - they can afford to retire without a DB plan

 

[Big_Hitter]

What is very difficult for me is to guess what personal need you are trying to stroke with this post that seems so silly to so many of us, sitting here retired for years, who did not have a defined benefit pension. How do you think small business owners retired and continue to retire? Who gives them their defined benefit plan?

Ha

nothing, thanks for your input

small business owners typically sell and retire on the profit, or they establish substantial owner DB plans and sock it away

 

[2B]

^ no surprise - they can afford to retire without a DB plan

We all can. It just comes down to making the right decisions.

 

[Big_Hitter]

of course you can - it's just more difficult, especially if you are in the bottom quartile income wise

 

[daylatedollarshort]

^ no surprise - they can afford to retire without a DB plan

A similar AARP survey says that Social Security accounts for about 4 / 5 dollars of income for older Americans with low to moderate incomes. I don't see any group in either survey living largely on pension income.

http://www.aarp.org/content/dam/aar...older-americans-2012-fs-AARP-ppi-econ-sec.pdf

 

[pb4uski]

Here is a link from Vanguard on the sources of retirement income for wealthier retirees. Pension income only accounts for 20% on average:

https://institutional.vanguard.com/iam/pdf/CRRRIP.pdf?cbdForceDomain=false

Yes, but how anxious are they?

 

[fosterscik]

Here is a link from Vanguard on the sources of retirement income for wealthier retirees. Pension income only accounts for 20% on average:

https://institutional.vanguard.com/iam/pdf/CRRRIP.pdf?cbdForceDomain=false

Wow. Wealthier retirees defined as those "ages 60–79 with at least $100,000 in financial assets, whether in taxable, tax deferred, or other types of accounts"

I guess that makes me (and many others on this board) VERY wealthy. Strange that I don't feel that way...

 

[Big_Hitter]

Yes, but how anxious are they?

 

[Walt34]

Wow. Wealthier retirees defined as those "ages 60–79 with at least $100,000 in financial assets, whether in taxable, tax deferred, or other types of accounts"

I guess that makes me (and many others on this board) VERY wealthy. Strange that I don't feel that way...

Same here. Where's my yacht, servants, and helicopter?

 

[samclem]

of course you can - it's just more difficult, especially if you are in the bottom quartile income wise

As it has always been. A person (or family) earning well below the median income will need to watch expenses very carefully in order to put away enough to stop working. OTOH, if they are happy with that lifestyle, their SS checks alone will go a long way toward matching what they were making during their working years. For low-income workers, SS is a tremendous deal.

There has never been a time when most families in the US were covered by employer DB plans.

 

[Big_Hitter]

There has never been a time when most families in the US were covered by employer DB plans.

hmmm...given that nearly half of all private sector employees were at one time covered by DB plans...

Fact March 1998 | EBRI

...I'm thinking that at one time over half of the US workers had a DB plan.

 

[pb4uski]

hmmm...given that nearly half of all private sector employees were at one time covered by DB plans...

Fact March 1998 | EBRI

...I'm thinking that at one time over half of the US workers had a DB plan.

But.... while many may have been covered by a DB plan, were they vested? Vesting periods were typically quite long before they made the change to 5 year cliff vesting in the 1980s. I recall an employer that I worked at from late 1980 to mid 1986 had a long vesting period so I got nothing for my over 5 years of service.

 

[samclem]

hmmm...given that nearly half of all private sector employees were at one time covered by DB plans...

Fact March 1998 | EBRI

...I'm thinking that at one time over half of the US workers had a DB plan.

I guess it depends on what we mean by "covered".

 

[BLS53]

+1 There was a reasons that employers drifted from DB to DC plans and I don't see those reasons changing.

I think the reason for the provocative thread title is that this is the poster who claims that it is very difficult to retire without a defined benefit pension who many have tried to convince that is not true but he ain't listening.

(emphasis added)

It's not difficult for the vast majority of members of this board. For society as a whole, it's difficult. Most people don't have the income to end up with a couple of million dollars to retire on. Without SS they wouldn't retire at all.

 

[pb4uski]

I disgree. There are plenty of people with median income that have the discipline to live within their means and save regularly for retirement. The proverbial pizza delivery guy that early retires. While I concede that many of us had higher than average incomes, nonetheless there are many examples of people with median incomes who had the discipline to be able to retire early.

I would concede that median income people don't typically have the discipline to pull it off, but that doesn't mean that it is not possible.